By Scott Nishimura snishimura@bizpress.net
Increased home sales and limited supply, rising commercial occupancies, higher apartment occupancy and rents, and better return rates on real estate investments based on projected income are combining to push values up, the Tarrant Appraisal District’s chief appraiser told Fort Worth City Council members Tuesday.
Preliminarily, TAD has the city of Fort Worth’s tax roll up 5 percent overall, not including minerals and the impact of taxpayers’ protests, Jeff Law, the chief appraiser and executive director, told council members.
“I’m honestly not that comfortable with it,” Law said in an interview after his presentation, adding that TAD is still completing the sending out of commercial appraisals.
Law, invited by the city to present preliminary TAD projections for 2014 property taxes, told the council that TAD currently sees a 9 percent increase in commercial values and 10 percent or more in apartments.
But he said in the interview those numbers are highly preliminary and potentially unreliable.
TAD expects to certify the city’s tax roll by July 25, as the city prepares its 2014-2015 fiscal year budget.
On residential real estate, “sales are up in Tarrant County,” Law told the council. “There’s demand for residential real estate, and there’s very, very limited supply.”
A friend recently put a home up for sale and quickly received six offers, Law said. One sent family photos to the seller in hopes of swaying the decision, he said.
Law also said investors’ capitalization rate are down, a measure that divides projected income by the price the investor paid for the asset.
“When cap rates are down, that tends to reflect a higher valuation,” Law told the council.
TAD has no mineral-related data yet to use in making appraisals.
“I don’t expect there to be a big rise,” he said, noting there’s been no notable increase in drilling.
TAD saw a $1.1 billion increase in new construction on the tax rolls as of Jan. 1, reflecting construction that occurred in 2013, Law said.
“We’re seeing some good growth,” he told the council.
Apartments got a boost from residential foreclosures, he said.
When foreclosures occurred, those homeowners “didn’t go live in a box under a bridge somewhere,” he told the council. “They went to an apartment complex, and apartments filled up.”
Law warned the council of potential lawsuits against TAD that could remove property value from the tax rolls.
In 2012, TAD had 252 lawsuits filed against it, reflecting $2.9 billion in value, he said. In 2013, TAD had 206 suits filed against it, involving $2.3 billion in value.
The basis of such lawsuits typically involve either a dispute over market value, or valuation compared to neighboring property values, Law said.
TAD views plaintiffs’ comparisons against neighboring properties to be faulty in some cases, Law told the council.
In one case, the owner of the Highlands shopping center in Arlington sued the appraisal district, seeking to have its value compared to that of the of the neighboring Parks at Arlington’s.
“It’s becoming an issue,” Law told the council, asking for a meeting with the staff and council to discuss it further.
“I think there is value that can be possibly removed from the tax roll (via the litigation) that probably should be maintained,” he said.
In a related matter, the City Council continued for 30 days a vote on whether to hire an outside firm to audit the city’s homestead and over-65 property tax exemptions.
TAD raised questions, Mayor Betsy Price said. It’s TAD’s legal obligation to determine who qualifies for exemptions, “and we’re going to sit down and talk about how this affects them,” Price said.
TAD runs audits “all the time,” Price said. Among other things, it follows sales activities, and even newspaper obituaries for continuous review of the over-65 exemption.
“We have ladies that look at the newspaper every day for obituaries,” Law told the council.